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10866: Consent Forms for Use and Disclosure of Tax Return Information


Banking Generally

Choose from the following topics about consent to use and disclose forms: 

 

CONSENT TO USE

The Consent to Use must be obtained prior to using the taxpayer’s information for any other purpose than to prepare or e-file the return. This would apply to offering the taxpayer any type of product such as an IRA or a bank product based on taxpayer information. Generic Consent to Use forms are on the Drake Software CD in Blank Forms and in PDF format. These can be used to customize for your office specifically.

Additionally, as an option, within the software there is a USE screen that the taxpayer can electronically sign at the beginning phase of tax preparation. The tax preparer is not permitted to sign the Consent to Use screen on the taxpayer’s behalf.

From the IRS FAQ:

"Q9 What are “uses” of tax return information?

A9
Uses of tax return information are occurrences where tax return preparers refer to, or rely on, tax return information as the basis to take or permit actions. The regulations authorize two types of uses:

  • Certain permissible uses without taxpayer consent
  • Uses requiring taxpayer “consent to use tax return information”

The regulations authorize tax return preparers to use specified tax return information without a taxpayer’s prior written consent under certain circumstances: e.g., to create lists for solicitation of tax return business; to produce statistical information in connection with tax return preparation business. These and other exceptions can be found in Treas. Reg. §301.7216-2.

All other uses not specifically authorized require tax return preparers to secure from taxpayers advance signed consents .... authorizing the uses."

(http://www.irs.gov/uac/Section-7216-Frequently-Asked-Questions)

What are the options in the software to facilitate USE consent forms?

Drake gives you two options:

  • Option 1 – Print the forms for taxpayer signature from Tools > Blank Forms.
  • Option 2 – Have the taxpayer(s) sign the forms in the software. The taxpayer can electronically sign and date the USE screen. The tax preparer cannot sign and date the USE screen on behalf of the taxpayer. The USE document with the taxpayer's electronic signature will print with the return.

Is it necessary to have a USE Consent with every tax return?

Only if you plan to use the data or information for purposes other than preparing and e-filing the return.

CONSENT TO DISCLOSE

The Consent to Disclose must be obtained prior to sharing taxpayer’s information to a third party. This form is automatically produced when a bank product is selected and prints with the bank documents. Additionally, another option is the DISC screen within the software that the taxpayer can sign electronically. The tax preparer may not sign the Consent to Disclose on the taxpayer’s behalf.

The following comes from the IRS FAQ

"Q6 What are “disclosures” of tax return information?

A6  Disclosure of tax return information is the act of making tax return information known to any person in any manner whatsoever. The regulations authorize two types of disclosures:

  • Certain permissible disclosures without taxpayer consent
  • Disclosures requiring taxpayer consent

The regulations provide exceptions allowing tax return preparers to disclose tax return information without a taxpayer’s prior written consent under certain circumstances: e.g., disclosures to the IRS, other taxing jurisdictions or the courts; disclosures to other U.S.-based tax return preparers that assist in preparing the return; and disclosures for the purpose of obtaining legal advice. These and other exceptions can be found in Treas. Reg. §301.7216-2.

All other disclosures not specifically authorized require tax return preparers to secure from taxpayers advance signed consents ... authorizing the disclosures."

 (http://www.irs.gov/uac/Section-7216-Frequently-Asked-Questions)

What are the options in the software to facilitate Consent to Disclose forms?

  • Option 1 – Print the forms for taxpayer signature from Tools > Blank Forms.
  • Option 2 For disclosure to a bank for bank products – Have the taxpayer(s) sign the forms in the software. Go to the DISC screen and have the taxpayer electronically sign and date the DISC screen. The disclosure to the appropriate bank will be produced with the return and will contain the electronic signature of the taxpayer.

The DISC screen in the software is for disclosure to a bank and is for the taxpayer to sign electronically.

  • Option 3 For disclosure to a bank for bank products – Have the taxpayer(s) sign the printed form. Select the appropriate bank screen and complete the screen. The appropriate disclosure will print with the bank signature documents.

For EPS – when using this method, be sure to check the 7216 signature box at the top of the EPS screen. This will clear EF message 5774.

CONSENT TO DISCLOSE TO A MASTER EFIN (franchise/network)

If you are operating an office that is not owned by the master EFIN, but the master EFIN needs to see the data on the Online DATABASE or MOM reports – Go to SETUP > ERO. At the bottom, as shown below, enter the name of the master EFIN.

An entry on this line will cause the software to look for a CONS screen to be completed with every return. Otherwise the software will produce a message 5717 or 5718.

  • Option 1 – Have the taxpayer(s) sign the forms in the software. The CONS screen can be signed and dated electronically by the taxpayer.
  • Option 2 – Have the taxpayer(s) sign the printed form from Tools > Blank Forms. Mark the option box on the CONS screen to indicate that the consent was obtained on paper,
  • Option 3 – Mark the option box on the CONS screen to indicate that the taxpayer opted out or did not sign the Consent to disclose to the master EFIN. If the taxpayer declines or the tax preparer fails to obtain the consent and the bottom box is marked, the return can be e-filed but will not be viewable on the ONLINE database or MOM reports.

The CONS screen should be completed only when a sub EFIN needs to share data with a master EFIN that does not own the sub (such as a franchise).

Summary - Where to Find the 7216 Forms:

Use and Disclosure 7216 consent forms are available in the software at Tools > Blank Forms.

Bank or Generic Forms Use Forms Disclosure Forms
Online Blank Forms Online Blank Forms
EPS Yes No Yes Yes
Republic Yes No Yes Yes
River City Yes No Yes Yes
TPG Yes No Yes Yes
Refund Advantage No No No Yes
 Refundo No No Yes Yes
RefundPoint No Yes No Yes
ABCVoice Yes
Yes Yes
Yes
Protection Plus Yes Yes Yes Yes
ACA No Yes No No
*Generic blank forms –Use: 7216_USE.PG, Disclosure (to firm – franchise/network, or other entity): OF_7216D.PG

Additionally, as an option, within the software the following screens can be signed by the taxpayer:

  • USE – Consent to Use of Tax Return Information
  • DISC – Consent to Disclosure of Tax Return Information
  • CONS – Consent to Disclosure of Tax Return Information to Other Firms (for sub EFIN to share data with master EFIN that does not own the sub EFIN – franchise/network situations)

The tax payer must enter a signature on these screens. The preparer is not permitted to sign them on the taxpayer’s behalf.

EF Messages Related to Consent to Use/Disclose

EF Message 5743:

FRANCHISE/NETWORK SETUP NOT COMPLETE: Some or all of the electronic signature fields have been completed on the CONS, Consent to Disclosure of Tax Return Information to Other Firms screen, but the software has not been set up for this functionality.

To set up the software, go to Setup > ERO and enter the name of the franchise or network that the tax return information will be disclosed to in the 'Disclosure of Use of Tax Information by Preparers of Returns' section.

If the CONS screen has been completed in error, return to data entry and delete the screen.

To resolve this message you will need to either:

  • Check to make sure that the ERO screen is setup for this function. You can do this by going to Setup > ERO and filling out the section at the bottom of the screen titled Disclosure or Use of Tax Information by Preparers of Returns.
  • Go  back into the return and delete the CONS screen. You can do this by going to Data Entry > Miscellaneous Tab > CONS Screen > Press CTRL + D when on this screen.

EF Message 5717:

The Consent to Disclosure of Tax Return Information to other firms has
not been completed. This consent allows disclosure of the tax return
information to the franchisor or network and is required to be
presented to the taxpayer for consent or decline. This consent can be
completed electronically or on paper.
 
To complete the consent electronically, the taxpayer must enter his or
her name and the date of consent on the CONS screen.  If the taxpayer
declines to sign the consent, select the Consent of Disclosure of Tax
Return Information to franchisor or network has NOT been signed
by the taxpayer box at the bottom of the CONS screen.
 
To complete the consent on paper, give the client a copy of the
Consent to Disclosure of Tax Return Information for franchisors or
networks. If the taxpayer consents to the disclosure, select the
Consent to Disclosure of Tax Return Information to franchisor or
network has been signed by the taxpayer box at the bottom of the
CONS screen. If the taxpayer declines to sign the consent, select the
Consent of Disclosure of Tax Return Information to franchisor or
network has NOT been signed by the taxpayer box at the bottom of
the CONS screen.

Note: The text of EF Messages 5717 and 5718 are essentially the same. EF Message 5718 is produced only in a MFJ return.

EF Messages 5717 and 5718 are generated when two conditions are met:

  1. An entry exists on the Setup > ERO screen in the field Need consent to disclose tax return information to this franchisor/network near the bottom of the screen.
  2. The CONS screen is not completed.

To resolve the issue, either

  • Clear the Need consent to disclose tax return information to this franchisor/network field from the ERO screen, or
  • Complete the CONS screen.

Notes:

  • You do not have to obtain a Consent to Use or Consent to Disclose to e-file through Drake.
  • On a joint return, best practice is to get the signature of both the taxpayer and spouse, if both are present.
  • Drake recommends that all tax preparers visit the IRS site and become familiar with these regulations. 
  • The software does not generate Spanish versions of the 7216 consent to use/disclose documents.


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